Hi Community,
I'm planning to start a music class for preschool children. I plan to start it in September however I am wondering if I can start purchasing musical instruments now or do I need to wait until the next financial year?
If I can purchase now, do I claim it against my current wage or do I claim it next year?
Thanks in advance
Hi @bananamorana,
It's completely up to you whether you buy the instruments now or in the next financial year. Keep in mind it will change how you go about claiming them. Either way, the expenses need to be claimed in the financial year they were incurred.
If you choose to buy them this year you'll need to claim them as a business expense in this financial year. This means you'll need to ensure your ABN was active from some point in the financial year too, otherwise you won't be able to claim the expense. If you don't have any business income, claiming deductions will result in a business loss for this financial year. You would need to offset the loss and look at claiming it in a later financial year. There are some situations where you can offset the loss against other income types (such as employment) in the current year. To do this you'll need to meet some requirements.
If you were to buy the instruments in the next financial year you would claim it as an expense against your business income in the 2022-2023 tax return.
Hi @bananamorana,
It's completely up to you whether you buy the instruments now or in the next financial year. Keep in mind it will change how you go about claiming them. Either way, the expenses need to be claimed in the financial year they were incurred.
If you choose to buy them this year you'll need to claim them as a business expense in this financial year. This means you'll need to ensure your ABN was active from some point in the financial year too, otherwise you won't be able to claim the expense. If you don't have any business income, claiming deductions will result in a business loss for this financial year. You would need to offset the loss and look at claiming it in a later financial year. There are some situations where you can offset the loss against other income types (such as employment) in the current year. To do this you'll need to meet some requirements.
If you were to buy the instruments in the next financial year you would claim it as an expense against your business income in the 2022-2023 tax return.
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